Harley-Davidson will outsource some production due to retaliatory tariffs

26 June, 2018, 15:30 | Author: Lora Ball
  • Harley-Davidson to move production for some motorcycles out of US after EU tariffs

Wisconsin's top Republican leaders are not criticising President Donald Trump's trade policy or Harley-Davidson's decision to shift the production of motorcycles headed for Europe from the United States to factories overseas.

"Harley-Davidson expects ramping up production in worldwide plants will require incremental investment and could take at least nine to 18 months to be fully complete", the company said.

Harley sold 40,000 motorbikes in Europe previous year, its second-largest market after the US. The company already has plants in Australia, Brazil and India, and it will soon open another facility in Thailand.

Harley-Davidson, the dominant player in the heavyweight U.S. motorcycle market said earlier on Monday it would not pass on any retail or wholesale price increases in the European Union and instead focus on shifting some USA production.

In response to the United States tariffs, the European Union began charging import duties of 25 per cent on a range of American products, including big motorcycles like Harley-Davidson's, on June 22.

Harley-Davidson's stock fell 5% on Monday.

"Modern trade is a lot more complex [than in the 19th century] and transnational companies dominate".

"Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag", Trump wrote on Twitter.

Mr Trump vowed to make the iconic motorcycle maker great again when he took office a year ago.

Donald Trump has promised that his sweeping global tariffs would bring jobs back to America.

It anticipates the cost for the rest of the year to be approximately $US30 million ($40 million) to $US45 million ($61 million).

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In response to tariffs imposed by the European Union, Harley-Davidson says it will move production of motorcycles made for markets overseas out of the United States.

Quartz reports that the overall cost to Harley Davidson is expected to reach $100 million.

Harley shares closed down almost 6 per cent and analysts cut their profit forecasts on concerns about how quickly the company would be able to adapt to the 25 per cent import duties the European Union began charging on June 22.

Trump's attack came after the company said in a filing earlier Monday that it would produce motorcycles bound for European countries in overseas factories.

It would be alarming, to say the least, to find out that Harley Davidson motorcycles assembled elsewhere would later be exported to the U.S. "The results of President Trump's tax cuts can be seen in our Nation's business environment, as American companies start investing once again", the White House said in a post that the president's @POTUS account retweeted to 23.5 million followers.

In January, Harley-Davidson announced that it would be closing its plant in Kansas City and moving leftover production to York, Pennsylvania. He has events that day in Milwaukee, where Harley-Davidson has its headquarters, and Mount Pleasant.

Other US products caught up in European Union tariffs include cranberries, peanut butter, playing cards and whiskey.

The company did not comment on how many jobs would be shifted away from the USA, but said that it would take between nine and 18 months to move production away from Wisconsin.

The EU, like Canada, Mexico and China all are aiming retaliatory tariffs at targets aimed to weaken Trump and the GOP in key political battlegrounds.

Harley-Davidson will not raise its prices to avert "an immediate and lasting detrimental impact" on sales in Europe, it said.

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